GAP Resource invests in pig farming

​Shuvalovo runs 3 pig farms, a meat-processing plant, a feed mill and a dairy farm in Kostroma region, nearly 300 km northeast of Moscow.

Boosting production performance

GAP Resource said that the integration of new assets into the technological cycle will pave the way for the company to further boost its production performance. The company also emphasised that the remoteness of the pig farms from its poultry farming facilities in European Russia will help it comply with the halal quality standards of its core business.

Investment attractiveness

Shuvalovo manufactures around 10,000 tonnes of pork in live weight and 2,500 tonnes of sausages per year, the Russian newspaper Kommersant reported. It cited an anonymous source familiar with the matter.

In 2023, GAP Resource was ranked first in the list of the largest Russian broiler meat manufacturers. It produced 1.04 million tonnes, according to the Russian National Union of Poultry Farmers. In addition to broiler meat, the company also produces lamb sausages, vegetable oil and dairy products. The company has never produced pork before.

The takeover indicates that pig farming, despite all the challenges it faces, remains attractive for investors, Konstantin Korneev, executive director of Rincon Management, a Moscow-based consultancy, said. GAP Resources will take advantage of its well-established supply chain when selling pork products.

Bumps in the road

However, the prospects of successfully selling processed pork products look vague. According to Korneev, this niche is oversaturated. Furthermore, only large federal companies manage to earn good revenue in this business, thanks primarily to the economy on the scale. “Many small manufacturers have difficulties with this, so management will have to carefully analyse what assortment to enter the market with.”

In 2022, African Swine Fever hit one of Shuvalovo’s production assets. The company withstood that blow and continued operations, according to the Russian Union of Pork Producers.

GAP Resource reportedly negotiated in 2022 to acquire a prominent Russian pork manufacturer, CoPitania. This deal however has never been finalised.

Agroinvestor pointed out that the pig industry offers bright export opportunities to investors. Over the past five years, Russia tripled pork exports, pushing it to 255,000 tonnes in 2023. As China withdrew its 15-year import ban on Russian pork at the end of 2023, Russian pig farmers expect this figure to double in the next few years.